Every year hundreds of people make official complaints about their bank’s investment advice.
The high street’s biggest banks field the most complaints about investments generally, according to figures from the Financial Ombudsman Service, which mediates in fallouts between consumers and financial companies.
A large portion of these relate to the way they have been sold or the advice given.
Here, The Mail on Sunday hears from two bitterly disappointed customers of HSBC’s ‘Premier’ service, who cast doubt on whether bank advice ever represents value for money.
One long-standing HSBC customer told us he lost out financially because of the bank
HSBC stopped us paying in cash and lost my will
A long-standing customer of HSBC says he lost out financially because of actions by the bank.
As a Premier customer, Tom Wilson (his name has been changed) gets worldwide travel insurance, preferential rates on savings and loans – and financial advice for him and his wife.
To be eligible, customers must have at least £50,000 in savings or investments with HSBC, or another of the bank’s products and an individual annual income of at least £75,000. Fees apply for advice.
Tom, who lives in the South West, held £450,000 in cash during the financial crisis. These £50 ‘Houblon’ notes bore the image of Sir John Houblon, who was the first Governor of the Bank of England in 1694.
The 73-year-old former finance officer says: ‘Near retirement and fearful after the Northern Rock disaster, we put savings into Houblons.
HSBC, which also held my will as an executor, advised keeping the notes sealed to ease re-depositing at a later date.
‘However, in February 2013 we were stopped from doing so by a manager who wrongly said the notes were shortly to be withdrawn from circulation.’
Even if banks do act correctly, limitations in advice may be detrimental to customers
Houblons did not cease to be legal tender until the end of April 2014 – a year later – when they were replaced by notes already in use, bearing the faces of industrialists Matthew Boulton and James Watts. Tom adds: ‘Our cash was essentially frozen by HSBC on a false premise and we could not deposit or invest elsewhere for more than a year.’
Eventually, in 2014 the couple were allowed by a different manager to re-deposit their cash, but they say it was too late and they missed their investment opportunity.
During this time the bank also lost Tom’s will. He says it has been ‘four traumatic years’ trying to make bank staff and the Ombudsman understand his complaint, and says the handling of his case has been of a ‘deplorably low standard’.
An HSBC spokeswoman says: ‘The customer’s complaint dates back to 2008 when he decided to hold cash during the financial crisis. In 2013, when he came to trade in his cash, the notes were no longer in service.’
But Tom points out this was incorrect as Houblons were not withdrawn until the end of April 2014 – a date that is confirmed on the Bank of England’s website. HSBC had suggested Tom went to the trouble of booking appointments at larger branches to deposit his cash in tranches, which he refused. After further discussions he was permitted to put the entire sum back into the bank in 2014.
Commenting on the lost will, a spokesman says: ‘We have apologised for losing his will, and for the distress and inconvenience this caused, and have offered to pay for a replacement.’
The bank denied one man investment advice on account of his wife’s health problems
Bank denied me advice after 72 years as a customer
A second Premier customer says he feels ‘abandoned’ by the bank after it denied him advice about his investments on account of his wife’s health problems.
The 83-year-old, who does not wish to be named, has been a customer for 72 years – having first opened an account aged 11 when it was known as Midland Bank.
But recently he was told financial advice is not available to clients if they or their partner need long-term care. His wife has Parkinson’s disease and dementia but her care is fully funded.
He also holds power of attorney and can therefore make financial decisions on her behalf, though it is a grey area about what decisions can be made about someone else’s investments. He says: ‘I have been a loyal client for 72 years and just when I need their help most at my age, they abandon me.’
He believes the decision is a ‘disgrace’ and that the bank is paid for a service it is not performing – leaving him unsure about whether to stick with or sell investments.
HSBC referred the customer to the Society of Later Life Advisers.
An HSBC spokeswoman says: ‘We understand that when a customer or family member enters care it is always a difficult time. Given the complexity of advice needed we refer them to specialist, accredited advisers who have the technical expertise in this area and can ensure the best outcome for them.’
But is it even worth taking bank advice?
Even if banks follow their rules carefully, limitations in their advice may be detrimental to customers. Rachel Sartin works for adviser Chase de Vere and is a chartered financial planner – the highest badge of honour among advisers.
She says helping clients who have previously received incomplete, sales-focused advice from their bank is commonplace, adding: ‘Some bank advisers focus too much on selling products, especially their own, or can only give advice on a limited range of products.’
Sartin recently had a meeting with a female GP who was disappointed by a ‘restricted adviser’.
These professionals can only make recommendations about specific products or from a limited range of products.
Sartin’s client was not able to get advice about her pension because the adviser could only discuss pensions from a set list, which did not include her own. The client’s Isa investments were not part of the company’s range either so the adviser, unable to deliver advice on those accounts, tried to sell the GP new ones.
Sartin says: ‘The GP wanted to invest ethically but this was never discussed with the adviser who was more focused on selling their own firm’s products.’
What you need to know about types of financial advice
These are the different types of financial advice available:
The ‘gold’ standard of advice comes from independent financial advisers, who consider all options across the whole of the market. They can assess your needs holistically, spotting how one individual concern might impact another, for example the tax implications of a particular investment.
Usually found at banks as well as standalone firms. Some are restricted by their area of specialism, such as pensions or investments, but can still recommend any product from across the whole of the market. Others are restricted by what products they can recommend or sell. In some cases restricted advisers are limited in both ways – by specialism and product range.
A computer algorithm can help customers decide their next steps and is often called a ‘robo-adviser’. These are no substitute for recommendations from a fully regulated and qualified human being, but it is a cheaper and simpler route for people with basic financial needs.
Increasingly it is being adopted by online companies – such as Nutmeg, Moneyfarm and Moneybox – to help customers identify a suitable investment portfolio, which is then managed on their behalf. However, experts say unless a human is behind it offering regulated advice, it is not advice at all – instead it is ‘guidance’.
THIS IS MONEY’S FIVE OF THE BEST CURRENT ACCOUNTS